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Sibanye sees possible further opportunities in growing battery metals sector
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16th September 2022 By: Darren Parker Senior Online Writer
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The global forecast for battery electric vehicle (BEV) production has risen by 120% over the past two years, according to research carried out by research and consulting firm SFA (Oxford).
SFA (Oxford) senior battery markets analyst Lakshya Gupta, who presented the research findings during a webcast hosted by diversified miner Sibanye-Stillwater on September 14, noted that some of the BEV production appears to be weathering global component supply disruptions better than internal combustion engine (ICE) vehicle production.
“It's a combination of strong consumer demand, with original-equipment manufacturers (OEMs) prioritising electric vehicles (EVs) over ICE cars throughout the recent semiconductor chip shortage,” he said.
Globally, the top 15 EV markets experienced about 80% growth in the first half of this year, against a backdrop of a 10% decline in overall car sales.
“Basically, the EV market has just become more competitive. OEMs are allocating more and more capital resources to make this trend happen and expanding and bringing forward the timelines. Consumers have more attractive models and more and more models to choose from every year, which is generating demand,” Gupta explained.
Another key driving factor behind the EV market success is the “carrot and stick” approach from governments, where subsidies or tax rebates make EVs more competitive than ICE cars in terms of price, he said.
One of the most critical metals for the ongoing success of EV production is lithium, Gupta noted.
Lithium-ion batteries have the highest potential performance relative to other commercial rechargeable batteries. They also have the highest power density which, for an EV, translates to acceleration and they have the highest energy density, which translates to the range of the car.
Lithium is required in BEVs to have acceptable performance, based on consumer expectations from ICE cars. This performance is determined by the composition of cell components.
Ions move through the separator during normal operation, between the two electrodes of the cell. Cathode materials are the main driving factor behind the price of EVs. If the cost of the cathodes can be reduced, the cost of EVs will come down, Gupta explained.
Although lithium prices may have peaked, they remain at extremely high levels for both lithium carbonate and lithium hydroxide, he noted.
“The lithium market is forecast to move to mounting deficits from next year onwards, but supply from ‘probable’ and ‘low-risk possible’ projects could potentially keep the market balanced through to 2025. Prices are likely to reach a floor in 2024, before starting to rise to incentivise higher-risk projects,” he explained.
So far this year, Gupta said, EV sales appeared inelastic to battery metal prices. This could be owing to several factors, including strong demand pull, OEMs not passing on rising production costs, a boost in EV demand as a result of pent-up savings since Covid-19 and the probability that OEMs prioritised EV production during the semiconductor chip shortage.
“Nonetheless, our analysis and research in the last few years has shown that lithium is likely to be the bottleneck in meeting aggressive EV projections,” Gupta stated.
Sibanye has made moves to involve itself in the battery metals market by concluding a series of transactions in 2021.
Key among these was the company’s investment in the advanced Keliber lithium hydroxide project, in Finland, aiming to be the first fully integrated European lithium producer with direct access to the European BEV market.
Sibanye spokesperson James Wellsted said that, to date, the company had committed €176-million for its 50%+1 shareholding in the Keliber project.
The maximum amount to buy out minorities to increase shareholding from 50%+1 to about 80% is estimated at €196-million, which the company aims to complete by October.
The Finnish Minerals Group is considering retaining about 20% of the project, while Sibanye will underwrite a further €104-million equity raise. Following these investments, Keliber would have raised €250-million in equity and will then raise a minimum of €250-million of debt to ensure the project is fully funded.
A definitive feasibility study and 31% increase in ore reserves has confirmed the quality and value of the project amid continued improvement in the lithium market outlook, Wellsted explained.
Additionally, permit approvals were progressing well with the associated Kokkola processing plant, with the environmental permit granted.
Sibanye has also invested in the Sandouville nickel refinery, in France, acquiring 100% of it in February for €85-million. Additionally, the company is planning on acquiring a 50% interest in the Rhyolite Ridge lithium project in Nevada, in the US, for $70-million.
“We do think there will be further opportunities given the current economic outlook,” Wellsted said.
Edited by: Chanel de Bruyn Creamer Media Senior Deputy Editor Online EMAIL THIS ARTICLE SAVE THIS ARTICLE ARTICLE ENQUIRY
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